What happened
Lucid Group (LCID -4.51%) shares dropped more than 80% in 2022, as it -- and other electric vehicle (EV) makers -- struggled to increase sales amid supply chain disruptions and general economic headwinds.
But some production news from a domestic competitor yesterday has investors more optimistic about what Lucid will say when it reports its own data. That had Lucid shares surging today. As of noon ET, the stock was near the day's high, up 8.3%.
So what
Fellow EV start-up Rivian Automotive just reported a large sequential increase in fourth-quarter production and deliveries compared to the third quarter. That has investors thinking Lucid could also do better than feared when it comes to its fourth-quarter and full-year vehicle production results.
Image source: Lucid Group.
Now what
Both Rivian and Lucid have lowered volume projections for 2022. But while Rivian did just say it barely missed its production target for the year, it was notable that the company reported a 36% jump from its third quarter to the fourth quarter. That has helped soothe investor fears that supply chain issues continue to restrict growth for these early-stage EV makers.
Even after Lucid's 80% stock price decline, its market capitalization is still almost $11.5 billion. That valuation still has plenty of growth built into it. The company has also said it will need to continue to raise capital to support its growth. It recently brought in another $1.5 billion, and there will likely be more needed.
But the key catalyst for its future success is executing a meaningful ramp-up in production. If it reports similar sequential growth to what Rivian had to say yesterday, investors will be placated.
That said, beware of any negative announcements regarding production or deliveries. That would very likely erase today's gains and more.
